Counterfeit Goods: Potential liability of a Freight Forwarder

Facts

In the recent case of Louis Vuitton Malletier v Megastar Shipping Pte Ltd and other suits [2017] SGHC 305, the Singapore High Court considered whether a freight forwarder who was involved in the transhipment of counterfeit goods was liable for trade mark infringement. Shipments of two containers loaded with counterfeit goods had been intercepted by the Singapore Customs. The counterfeit goods were shipped from China to Singapore, with the intention that they were to be sent to Third Party shippers in Batam, Indonesia.

The Plaintiffs argued that the Defendant was liable for trade mark infringement by importing and exporting counterfeit goods. In particular, the Plaintiffs argued that transhipment amounted to an import of the goods.

In response, the Defendant argued that it was merely acting as a freight forwarder and was not involved in the shipment of the goods. The Defendant also denied that the goods had been imported into Singapore.

The main issues for determination by the Court were:
1) Whether the counterfeit goods had been imported into Singapore for the purposes of the Trade Marks Act;
2) Whether the Defendant was the importer; and
3) Whether the Defendant was liable for exporting the counterfeit goods under the sign.

Whether the counterfeit goods had been imported into Singapore

The Court held that the counterfeit goods were imported into Singapore. The Court rejected the Defendant’s argument that goods brought into Singapore for the purpose of transhipment (i.e. not released into free circulation within Singapore) were not imported. As the Trade Marks Act was silent on the definition of “import”, the Court relied on Section 2(1) of the Interpretation Act, which provided that import means to “bring or cause to be brought into Singapore by land, sea or air”.

Whether the Defendant was the importer

While the Court held that the goods were imported into Singapore, it went on to find that the Defendant was not the relevant importer on the facts.

The Court found that the Defendant played no part in making the shipping arrangements, packing, or loading the containers on board the vessels. These were done by the shippers in China and/or the Third Party who instructed the Defendant. The instructions to the Defendant to declare transhipment status also came from the Third Party. The Defendant was also never in physical possession of the containers and played no part in unloading the sealed containers, storing the containers at their designated places, and loading on board the outward bound vessel.

It can be observed that a freight forwarder’s liability depends greatly on the facts. Another case with a different set of facts may well have a different outcome.

Whether the Defendant was liable for exporting the goods

As the counterfeit goods were seized before they were exported, the Plaintiffs had to argue that an intention to export was sufficient to find liability. However, the Court took the view that mere intention was insufficient, based on the plain wording of the Trade Marks Act.

It is possible that the Plaintiff(s) may appeal to the Court of Appeal. Given the impossibility of counterfeit goods being exported when they have already been seized by the Singapore Customs, it is hoped that a court will in future will clarify when a freight forwarder may be liable in such a case. We will continue to keep our clients updated accordingly.